Canadian company to invest in Somalian desert

Mar 21, 2012 12:00 AM

The prospect of plentiful crude oil has lured one Canadian company to northern Somalia’s hard-to-reach desert, and Al Quada isn’t happy about it.
Vancouver-based Africa Oil plans to invest $ 50 mm to drill two wells in northern Somalia’s Puntland region, which is home to the Al Quada-linked al-Shabaab militia. The first well, to be completed in March, will be the first drilled in Somalia in more than 20 years.

Africa Oil predicts the Dharoor Block in Puntland holds a bounty of over 1 bn barrels of oil, but the risks are equally large. An al-Shabaab Twitter post rejects the intrusion of Western companies and warns of potential local threats:
“Western companies must be fully aware that all exploration rights and drilling contracts in North Eastern Somalia are now permanently nullified.”

Africa Oil CEO Keith Hill acknowedged that there are 'significant' security costs and insurance premiums for operating in war-torn Somalia.
Still, given the insatiable global thirst for crude, Hill says the rarity of a 'billion barrel oil field' is a risk worth the reward.

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